Total commercial and multifamily mortgage borrowing and lending is expected to decline by 20% in 2023, dropping from $816 billion in 2022 to a projected $654 billion. This is according to an updated baseline forecast released by the Mortgage Bankers Association (MBA) at its 2023 Commercial/Multifamily Finance Servicing & Technology Conference in Chicago.
The MBA anticipates that multifamily lending – which comprises part of the total figures – will decrease 14%, falling from last year’s expected total of $437 billion down to a predicted figure of $375 billion this year. It is further estimated that borrowing and lending will rebound in 2024, with overall commercial real estate financing reaching an anticipated level of $829 billion, including approximately half ($456 million) dedicated towards multifamily loans.
Commenting on these projections, Jamie Woodwell – MBA’s head of commercial real estate research – stated: “Higher interest rates, uncertainty about property values and questions about the outlook for cash flows have caused a slowdown in CRE transactions since mid-2022; this trend looks set to continue throughout much of 2023 as investors seek greater transparency into markets.” He went on: “We anticipate maturing loans breaking up this logjam over time; however it may take until 2025 for volumes return back up again”.
